Update on Export Control Reform and
Implications on FRANCE-U.S. Trade
On October 15th, the United States will implement in...
A propos de Williams Mullen
La dénomination “A propos de Williams Mullen” n’est pas adéquate car à Williams
Mullen la seul...
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Impact on FRENCH COMPANIES: Export Controls Reform (stagg - norman)

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French companies : Impact of U.S. Export Controls Reforms

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Impact on FRENCH COMPANIES: Export Controls Reform (stagg - norman)

  1. 1. Update on Export Control Reform and Implications on FRANCE-U.S. Trade On October 15th, the United States will implement initial revisions to its export control laws as part of President Obama’s Export Control Reform initiative. These are the most significant revisions to U.S. export control laws in more than thirty years. Initially, the impact will primarily affect the aerospace industry. Specifically, the revised export controls will concern aircraft and gas turbine engines, including related articles such as systems and equipment. In 2014, additional revisions to the U.S. export control laws will take place that affect other critical categories such as vehicles, electronics, and space related articles. Those articles previously controlled by the U.S. Munitions List will shift to the Commerce Control List, which is administered by the Bureau of Industry and Security at the U.S. Department of Commerce. Although the control lists will continue to be updated over the next year, the general framework for the new export control process and transition policy will be in place on October 15th. The intent behind Export Control Reform is primarily based on jurisdiction: to remove less sensitive items from the U.S. Munitions List to the Commerce Control List. By controlling less sensitive items on the Commerce Control List, they are subject to less restrictive legal authorities than are items on the U.S. Munitions List. This will enable the United States to better promote exports of U.S. goods and technology. Previously, the complex export control system and unclear jurisdiction issues encouraged foreign companies to design out or otherwise avoid U.S.-origin content. One key benefit of items moving to the Commerce Control List is the available license exceptions, such as the Strategic Trade Authorization. By contrast, items on the U.S. Munitions List are subject to greater restrictions with limited export and re-export exceptions. French and U.S. parties will have to increase their familiarity with the available options that the U.S. Department of Commerce provides for exemptions or exceptions rather than the requirement to obtain a license. Another key benefit for items moving to the Commerce Control List is the de minimis rule. The de minimis rule allows for French made items to incorporate below de minimis thresholds (generally 25%) of U.S. origin items on the Commerce Control List without subjecting the French goods to the U.S. Department of Commerce for export and re-export authorizations. By contrast, if any item on the U.S. Munitions List is incorporated into a French made item, then the French item is subject to the U.S. Department of State for export and re-export authorizations (i.e., zero de minimus). While U.S. parties must prepare for the regulatory changes, French parties must also now understand how the changes will affect their activities and take the appropriate action. French parties will need to follow the same steps as U.S. parties in reviewing the appropriate jurisdiction of the articles, services, and technical data. French parties should review current inventory and agreements to see if these items have transitioned to the Department of Commerce. Given the benefits of the Commerce Control List, French parties should take an active approach in reviewing the appropriate jurisdiction of the items they are importing from the United States. The revisions to the control lists are intended to make them more clear by moving from subjective control criteria to objective control criteria. This will enable French parties to make informed self-classifications. In addition, French parties will need to understand the revised destination control statements that requires flow down by both U.S. and French parties of certain information, how to handle re-export and retransfers, how to notify suppliers and customers of any changes including their responsibilities as recipients of U.S. export controlled items, the de minimis and Foreign Direct Product under the Department of Commerce’s regulations, the impact on dual and third country nationals, and the use of the new paragraph (x) entry on the U.S. Munitions List. Also, French companies will need to understand the available license exceptions provided by the Department of Commerce. The benefits of these changes to U.S. export control laws are significant to French companies. It will allow greater business opportunities to take place with U.S. companies and reduce concerns or uncertainties that incorporating certain U.S. items will subject the French made goods to the jurisdiction of the Department of State (i.e., the so-called ITAR taint) or the Department of Commerce. To benefit from these changes, it will be necessary for French parties to understand the new regulations and how they impact their current or future activities. Although the Export Control Reform efforts will result in a number of new regulations, these new regulations are manageable and will provide greater clarity over which regulatory authorities apply. Co n t ac t Inf o r m at io n Eliot Norman 804.420.6482 enorman@williamsmullen.com Christopher B. Stagg 202.293.8135 cstagg@williamsmullen.com NC | VA | DC | WILLIAMSMULLEN.COM
  2. 2. A propos de Williams Mullen La dénomination “A propos de Williams Mullen” n’est pas adéquate car à Williams Mullen la seule priorité, c’est vous. A Williams Mullen, notre but est d’aider votre compagnie à réussir dans cette économie. Nous vous proposons des solutions adaptées qui garantiront votre succès. Représentant plus de 75 “practices and industries”, Williams Mullen se fait un devoir de trouver des réponses et solutions à vos problèmes légaux et commerciaux. Que vous soyez le directeur juridique d’une société cotée en bourse comme “ Fortune 500”, le propriétaire d’une entreprise privée, le PDG d’une organisation à but non lucratif ou à la tête d’une agence gouvernementale, nous avons les avocats ou équipes d’avocats les plus performants pour vous aider à atteindre votre objectif. Si vous recherchez un partenaire juridique pour vous aider à développer votre entreprise, vous avez trouvé le cabinet idéal. Travaillons ensemble pour garantir votre succès. Industries Include: > > > > Banking Construction Financial Services Government Contracts > > > > Health Care Hospitality Insurance Long Term Care > > > > Manufacturing Software Retail Transportation Practice Areas Include: Antitrust Attorneys General and State Agencies Practice Aviation Banking Bankruptcy & Creditors’ Rights Business & Corporate Business Relocation/ Expansion Business Succession Planning Complex Business Litigation Consumer Finance Corporate Finance Corporate Law & Governance Economic Development Franchising eDiscovery & Information Governance Employee Benefits & Executive Compensation Energy & Infrastructure Environmental Fiduciary Litigation Financial Services Government Contracts Government Relations Health Care Immigration Intellectual Property International Labor & Employment Land Use Litigation Maritime Mergers & Acquisitions Patents Petroleum Private Client & Fiduciary Services Private Equity Public Finance Public-Private Partnership Real Estate Securities State & Local Tax Tax Controversy Tax Law Trademarks Whistleblower Defense White Collar and Investigations Worksite Enforcement ABOUT WILLIAMS MULLEN Williams Mullen provides comprehensive legal services. With approximately 250 attorneys and 10 offices throughout North Carolina, Virginia and Washington, D.C., we deliver innovative solutions to support our clients’ diverse business activities. Close working relationship with clients has been the foundation of our progressive approach to law practice since the firm’s founding in 1909. Williams Mullen regularly advises foreign corporation on all aspects of establishing and expanding their operations in the United States, including doing business with federal, state and local governments. Leader reconnu Mentionné dans Corporate Counsel magazine comme la “GoTo Law Firm®” pour les problèmes de propriété intellectuelle, transactions commerciales, valeurs mobilières, droit du travail & relations collectives et contentieux. Inclus dans la liste des 200 meilleurs cabinets d’avocats des Etats-Unis dans le AMLAW 200 American Lawyer magazine. Elu l’un des meilleurs cabinets d’avocats de droit des affaires par le Corporate Board Member magazine Quatre-vingt-dix-huit avocats de Williams Mullen ont été nommés “Best Lawyers in America” 2012; onze ont été nommés “Lawyers’ of the Year” A reçu un classement de premier rang au niveau national pour sa pratique du contentieux fiduciaire (“Trusts & Estates”)  dans la liste 2011-2012 des “Best Law Firms” de U.S. News - Best Lawyers A obtenu 80 Metropolitan FirstTier Rankings Reconnu comme un Leader en Droit des Affaires en 2011 par Chambers USA Huit avocats ont été nommés “Legal Elite” en 2011 par Business North Carolina Magazine Soixante-trois avocats ont été nommés “Virginia Super Lawyers” et 32 élus “Virginia Rising Stars” en 2012 publié par Law & Politics Quarante-six avocats nommés “Legal Elite” par Virginia Business magazine en 2011.

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